Specifically, the NYSDFS is looking into the relationship between Ocwen and a subsidiary of Altisource, Hubzu, which Ocwen uses as its principal online auction site for the sale of its borrowers' homes facing foreclosure.

The letter voices concerns over the two company's arrangement, mainly, "Hubzu appears to be charging auction fees on Ocwen-serviced properties that are up to three times the fees charged to non-Ocwen customers. In other words, when Ocwen selects its affiliate Hubzu to host foreclosure or short sale auctions on behalf of mortgage investors and borrowers, the Hubzu auction fee is 4.5%; when Hubzu is competing for auction business on the open market, its fee is as low as 1.5%."

This shift in fees raised eyebrows at the NYSDFS, who commented that the fees ultimately get passed onto investors and homeowners who are typically attempting to mitigate losses.

The NYSDFS noted concerns over "self-dealing," citing in a footnote, "As you [Timothy Hayes] know, a number of key Ocwen personnel have individual equity ownership stakes in Altisource Portfolio."

Additionally, Lawsky commented that the relationship between the two companies raises questions about whether the inflated fees are through conflicted business relationships, and thus, negatively impact homeowners. Lawksy also noted, "Alternatively, if the lower fees are necessary to attract non-Ocwen business to the open market, it raises concerns about whether Ocwen-serviced properties are being funneled into an uncompetitive platform at inflated costs."

The letter requests answers to some key questions, including the percentage of Ocwen-serviced properties on Hubzu, whether investors and homeowners are required to use Hubzu for their REO and short sale properties, and a confirmation of the 4.5 percent auction fee on Ocwen properties compared to the lower fee on auctions of properties not serviced by Ocwen.

Colin Robins is the online editor for DSNews.com. He holds a Bachelor of Arts from Texas A&M University and a Master of Arts from the University of Texas, Dallas. Additionally, he contributes to the MReport, DS News' sister site.

2 comments

I work for a small title company in central Florida and all I do is facilitate short sales. In December 2013, Ocwen changed their policy on how to get a short sale approved. Basically the homeowner(s) and their listing agent had to sign a consent form allowing Altisource to list the property for auction on HUBZU.com. The homeowner sought legal counsel which led to their Attorney submitting a letter of intent to sue Ocwen/Altisource. Despite our best efforts, Ocwen said the only way to do a short sale is to allow this program. The homeowner and listing agent did not have a choice but to sign the consent. Unfortunately, this rubbed our buyer the wrong way and after months of being patient, he walked and canceled the deal. After a couple weeks the listing agent was contacted by an agent from Altisource that a “winning bidder” was confirmed and the offer was $80K. Funny enough, that was the exact offer our buyer had in place. Ocwen could have saved a lot of time and allowed us to continue working on the short sale but they chose to force everyone’s hand in this new process with Altisource. The best part is that I had been working on this short sale for 8 months but because the “winning bidder” was not our buyer, we can no longer close the deal and they (Altisource) is using their in house title company. I hope that there will be a class action lawsuit because I would happily volunteer my time to serve as a witness and I would require no compensation. My only hope is that the end result would be that Ocwen could no longer do this. Especially because they are targeting those that are already going thru some sort of financial hardship which has caused them to go into default in the first place. It’s just not clear to me how this is even legal. Maybe since short sales are still some what new, there need to be some laws put in place protecting the homeowners as well. Thank you to anyone reading this 🙂